Definition
The Fair Credit Billing Act (FCBA) is a federal law enacted to protect consumers from unfair billing practices and provide a mechanism for addressing billing errors regarding open-end credit accounts like credit cards and revolving charge accounts. Codified under Title VI (Sections 127-129) of the Consumer Credit Protection Act, the FCBA addresses various billing disputes and sets procedures for resolving them.
Examples
- Incorrect Charges: If a consumer notices an unauthorized charge on their credit card statement, they can use FCBA provisions to dispute the charge.
- Goods or Services Not Received: A consumer who paid for an item that never arrived can dispute the charge through FCBA protections.
- Mathematical Errors: If there’s a mistake in the calculation on a bill, the FCBA allows the consumer to dispute this discrepancy.
Frequently Asked Questions (FAQs)
What types of accounts come under the FCBA?
The FCBA applies only to open-end credit accounts such as credit cards and revolving charge accounts. It does not cover installment loans or loans required to be repaid in a specific number of payments.
How does the FCBA address billing errors?
The FCBA requires that creditors acknowledge a consumer’s complaint within 30 days of receiving it and resolve the dispute within two billing cycles, but not more than 90 days.
What should consumers do to dispute a billing error?
Consumers should send a written dispute to the creditor’s address for billing inquiries, not the payment address, within 60 days of the error appearing on the statement.
Can a consumer withhold payment on the disputed amount?
Yes, under the FCBA, consumers can withhold payment on the disputed amount during the resolution process without risk of interest accruing or penalty fees.
What happens if the creditor does not comply with the FCBA guidelines?
If a creditor fails to follow the FCBA procedures, they forfeit the right to collect the disputed amount and associated finance charges, up to $50.
- Open-End Credit: A type of credit agreement that allows borrowers ongoing access to funds up to a specified limit, commonly exemplified by credit card accounts.
- Billing Cycle: The interval between billing statements for any open-end credit account, typically over one month.
- Billing Error: Any mistake in a billing statement including unauthorized charges, charges for goods not received, or arithmetic errors.
Online References
Suggested Books
- “The Law of Consumer Credit and Protection” by Michael Brian: A comprehensive guide that explores various consumer credit laws, including the FCBA.
- “Consumer Finance: Law, Regulation, and Policy” by Adam J. Levitin: This book delves into the regulatory environment of consumer finance, highlighting key laws and consumer protections.
- “Consumer Credit and the American Economy” by Thomas A. Durkin, Gregory Elliehausen, Michael E. Staten, Todd J. Zywicki: A detailed exploration of consumer credit trends, including regulatory frameworks like the FCBA.
Fundamentals of the Fair Credit Billing Act (FCBA): Business Law Basics Quiz
### What primary type of account does the FCBA apply to?
- [ ] Installment loans
- [x] Open-end credit accounts
- [ ] Auto loans
- [ ] Mortgage loans
> **Explanation:** The FCBA applies to open-end credit accounts, such as credit cards and revolving charge accounts, not installment loans.
### How long does a creditor have to acknowledge a billing complaint under the FCBA?
- [ ] 15 days
- [x] 30 days
- [ ] 45 days
- [ ] 60 days
> **Explanation:** Creditors are required to acknowledge a consumer's billing complaint within 30 days of receiving it.
### What is the time limit for consumers to dispute a billing error?
- [ ] 30 days from the statement date
- [ ] 45 days from the statement date
- [x] 60 days from the statement date
- [ ] 90 days from the statement date
> **Explanation:** Consumers have 60 days from the statement date to dispute a billing error under the FCBA.
### What actions can a consumer take if they discover a billing error on their credit card statement?
- [x] Submit a written dispute to the creditor's billing inquiry address.
- [ ] Ask for a refund without submitting a written dispute.
- [ ] Only report the error verbally.
- [ ] Wait until the end of the billing cycle to dispute the error.
> **Explanation:** Consumers should submit a written dispute to the creditor's billing inquiry address immediately, within the 60-day timeframe.
### If a dispute is unresolved, how long does the creditor have to correct the error according to the FCBA?
- [ ] One billing cycle
- [ ] 45 days
- [ ] 60 days
- [x] Two billing cycles but no more than 90 days
> **Explanation:** Creditors have two billing cycles, but no more than 90 days, to correct the error.
### Can a consumer be charged interest on the disputed amount during the resolution process?
- [ ] Yes, interest can still accrue.
- [x] No, the consumer is protected from interest accrual.
- [ ] Only if the creditor decides
- [ ] It depends on the state law.
> **Explanation:** Under the FCBA, consumers are protected from interest charges on the disputed amount during the resolution process.
### What happens if a creditor violates the FCBA?
- [x] They forfeit the right to collect the disputed amount.
- [ ] They have to extend the credit line.
- [ ] They pay a penalty fee.
- [ ] No consequences exist.
> **Explanation:** If a creditor fails to comply with FCBA guidelines, they lose the right to collect the disputed amount and associated finance charges, up to $50.
### What information must be included in a written dispute?
- [ ] The consumer’s income statement
- [x] The date and amount of the disputed charge
- [ ] The consumer’s credit score
- [ ] None of these
> **Explanation:** The written dispute must include detailed information such as the date and amount of the disputed charge.
### A consumer disputed a charge and sent a letter within 60 days. How should the creditor respond?
- [x] Acknowledge the complaint within 30 days and resolve it within two billing cycles.
- [ ] Resolve the complaint within one billing cycle.
- [ ] Ignore the complaint.
- [ ] Charge a fee for investigating the dispute.
> **Explanation:** A creditor is required to acknowledge the dispute within 30 days and then resolve the issue within two billing cycles.
### Which entity enforces the Fair Credit Billing Act?
- [ ] State consumer protection agencies
- [ ] National Credit Union Administration
- [x] Federal Trade Commission (FTC)
- [ ] Internal Revenue Service (IRS)
> **Explanation:** The Federal Trade Commission (FTC) is responsible for enforcing the Fair Credit Billing Act (FCBA).
Thank you for learning about the Fair Credit Billing Act (FCBA) through our comprehensive article and quiz. Keep honing your knowledge on consumer protection laws!
